Question

Dollar-Value LIFO On January 1, 2018, Sato Company adopted the dollar-value LIFO method of inventory costing. Sato's ending inventory records appear as follows:

Year Current Cost Index 2018 $42,000 100

YEAR	CURRENT COST	INDEX
2018	$42,000	100
2019	56,700	120
2020	60,060	130
2021	71,540	140

Required: Compute the ending inventory for the years 2018, 2019, 2020, and 2021, using the dollar-value LIFO method. Do not round your intermediate calculations. If required, round your answers to the nearest dollar.

Answer 1

Solution:

Calculate ending inventory

Year	Ending Inventory
2018	$42,000
2019	$53,340
2020	$47,040
2021	$53,900

Working:

Year	End of year price(A)	Price index(B)	base year amount (A)/(B)	Change from prior year
2018	$42,000	1.00	$42,000	$
2019	$56,700	1.20	$47,250	$5,250
2020	$60,060	1.30	$46,200	($1,050)
2021	$71,540	1.40	$51,100	$4,900

calculation of ending inventory Dollar value LIFO method:

Year 2018    $42,000

Year 2019 $42,000 @ 1.00 = $42,000

                 $9,450 @1.20 = $11,340

                                            $ 53,340

Year 2020   $42,00 @1.00             = $42,000

($5,250 - $1,050 = $4,200)@1.20 = $5,040

                                                        =$47,040

Year 2021 $42,00 @1.00           =$42,000

($5,250 - $1,050 = $4,200)@1.20 = $5,040

                  $4,900 @1.40             = $6,860

                                                     =$53,900